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Day trading picks up steam

By Sheyna Steiner ·
Friday, April 25, 2014
Posted: 4 pm ET

© Rawpixel/Shutterstock.comSix years into the bull market, some individual investors have apparently decided that now is a great time to start actively trading the stock market. This week, several discount brokerages reported significant jumps in daily trading volume during the first quarter of the year, The Wall Street Journal reported on Wednesday.

Not only are the amount of daily trades on the upswing, but investors are increasingly borrowing against their investment assets to buy more securities, according to the story, "Mom and pop step up their trading."

Borrowing money to speculate when the market is headed up can seem like a sure thing, but as soon as stock prices reverse, many newly minted day traders will find themselves scrambling to meet margin calls. Unless this time is different -- and it never has been -- it's not a question of if; it's when.

The investors who aren't trying to day trade are still wary of stocks. Split the difference into a reasonable asset allocation among several index funds representing a few major asset classes and you'll probably come out ahead of the guy who just borrowed $200,000 to bet on the stock market.

As usual, following a prudent but less exciting investing strategy is the way to win in the end.

What do you think? Are you waiting for a market dip before getting back in? Or is day trading your new cup of tea?

Sick of stocks and bored by bonds? Consider these five alternative asset classes.

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Senior investing reporter Sheyna Steiner is a co-author of "Future Millionaires' Guidebook," an e-book written by Bankrate editors and reporters. It's available at all the major e-book retailers.

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April 29, 2014 at 10:59 am

Borrowing money,paying interest on the possibility of going deficit on your trades,your also not a brain surgeon are you?

Ralph – Seattle
April 29, 2014 at 12:11 am

This is a sure sign that the market is getting ready to implode. Borrowing money to buy stock? Didn't we learn anything from the 1929 fiasco?